Income Tax Amendment Act (No. 2) 1987

Overview

The Income Tax Amendment Act (No. 2) 1987 was enacted to make adjustments to the Income Tax Act 1986, aiming to refine and update the tax framework in response to evolving economic conditions and fiscal policy requirements. This Act was introduced to address certain gaps and inconsistencies identified in the original tax legislation, ensuring that the tax system remains effective and equitable. The enacting body for this legislation was the Queen, in conjunction with the Senate and the House of Representatives of the Commonwealth of Australia. The policy objective, as articulated in the Minister's speeches during the second readings in both the House of Representatives and the Senate, was to provide necessary amendments to the income tax provisions, ensuring they are aligned with contemporary economic needs and legislative intent.

Scope and Application

The Income Tax Amendment Act (No. 2) 1987 amends the Income Tax Act 1986 and applies to the imposition and levy of income tax, modifying specific sections to adjust the tax framework for the financial years commencing on 1 July 1987 and 1 July 1988. The Act applies to all individuals and entities subject to income tax under the Principal Act, and its amendments are applicable to income from the year of income commencing on 1 July 1986 onwards. The scope of the Act is national, as it pertains to the Commonwealth of Australia. There are no specific exclusions or exemptions outlined in the text, and the Act itself does not extend or restrict its application through subordinate instruments. However, the application of these amendments may be subject to further legislative adjustments as provided by the Parliament.

Key Provisions

The main sections of the Income Tax Amendment Act (No. 2) 1987 are relatively straightforward. Section 3 removes the reference to section 128t from subsection (2) of section 5 in the Principal Act, thereby altering the scope of the income tax imposition. Section 4 modifies section 7 of the Principal Act to change the period for which tax is levied, now applying to the financial year commencing on 1 July 1987 and extending to the financial year commencing on 1 July 1988, unless otherwise specified by Parliament. Additionally, section 5 repeals sections 8, 9, and 10 of the Principal Act, which were likely related to specific tax provisions or transitional rules that are no longer necessary. Finally, section 6 ensures that the amendment applies to income from the year of income commencing on 1 July 1986 and all subsequent years. The obligations and requirements imposed by this Act primarily affect taxpayers and the Australian Taxation Office (ATO). Taxpayers must now comply with the amended sections of the Principal Act, specifically understanding that the tax imposition and levy have been altered for the specified financial years. The repeal of sections 8, 9, and 10 removes any obligations previously associated with those sections, potentially simplifying the compliance process for taxpayers. The ATO, on the other hand, must update its systems and guidance to reflect these changes, ensuring that both taxpayers and the ATO are operating under the correct legal framework. Breaches of the provisions set out in this Act could lead to various civil and criminal consequences. While the Act itself does not specify maximum penalties for breaches, the Principal Act, which this Act amends, includes provisions for penalties. Under the Principal Act, non-compliance or incorrect reporting can result in penalties, fines, and interest on unpaid tax. In more severe cases, criminal charges may be brought against individuals or entities found guilty of tax evasion or fraud, potentially leading to imprisonment and substantial fines. The precise penalties would depend on the nature and severity of the breach, as well as any relevant case law and regulatory guidelines.